The 2008 Budget

The Chancellor's 2008 Budget speech was a mixed bag for business, with his commitment to limiting the regulatory burden placed on business one of the few highlights for the food industry.

Speaking today (12 March), Alistair Darling said that the government was committed to ensuring that the UK remains one of the best places in the world to do business and said that he wanted to do more to support small and medium sized enterprises (SMEs).

He said that the Secretary of State for Business and Enterprise would therefore consult on "radical new proposals to impose a limit on the amount of regulation that can be imposed by Whitehall departments".

Darling also promised a 60% increase in funds available through the small firms loans guarantee in the next year and increased the amount of investment on which tax relief is available under the Enterprise Investment Scheme from £400,000 to £500,000. He said he hoped to tackle the skills shortages in British industry and promised an extra £60m to provide new opportunities for people to gain the skills needed to enter the labour market.

Melanie Leech, director general of the Food & Drink Federation (FDF), said: "Our members tell us that increasing regulatory burden is one of the biggest threats to their ability to compete - so we clearly applaud this initiative.

"But while the headline announcement is great, the devil, as always, will be in the detail - and we are not clear how government can apply meaningful quotas on departments given that so much regulation affecting our industry comes out of Brussels."

It was not all good news for SMEs. While larger companies will see a cut in corporation tax from 30% to 28% by April this year, businesses generating less than £300,000 in profit will see a rise in corporation tax from 20p to 21p. The budget also included a clampdown on the way family firms distribute their profits and an escalation in the cost of dumping business waste in landfill.

The expected 2p rise in fuel duty has been delayed until October, offering some reprieve to the transport reliant food industry, but the Chancellor has pushed forward other measures to protect the environment, including: a pledge for all new non-domestic buildings to be zero carbon by 2019, a proposal to impose charges for plastic bags and a proposal to increase Britain's carbon emission reduction target from 60% to 80%.

These environmental targets could put pressure on the industry, which is already suffering from the repercussions of the push to grow biofuels.

Leech said: "FDF welcomes the Chancellor's push on measures to protect the environment - an issue on which our members are showing genuine leadership. However, the Budget has raised many questions, not least around the commitment to ensure all new non-domestic buildings are zero carbon by 2019.

"It is also essential that his decision to replace the biofuels duty differential by the Renewable Transport Fuel Obligation does not have any adverse impact on raw materials prices.

"The temporary freeze on fuel duty is useful, but given the fact that food and drink manufacturers are coping with soaring costs, and consumers are being impacted by increasing food prices, it would have been better to have given some stability by ruling out the rise altogether."

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